Quarterly Journal of Austrian Economics

A Theory of Interest

Volume 5, No. 4 (Winter 2002)

Originary interest does not spring from the passing of time, but from the value relationship between means and ends. the means of action are inherently less valuable than the ends they serve. Therefore there is a value spread between means and ends—originary interest—in all human actions in which means and ends can be distinguished. Originary interest determines how each market participant chooses between production alternative of different length and physical productivity. The combined originary interests of all market participants determine the time structure of production of the entire economy, as well as of interest rates.